Regulation, mortgage companies, corporate culture, government, bankruptcy, 2008 economic crisis, high technology, market, Maryland deregulation, utility cost
The case presents some of the errors that the mortgage Companies made. Despite the New York Times warning in 1999, the Companies went ahead and guaranteed $12 trillion in the mortgage market. The situation severely affected them in the 2008 economic crisis. They committed themselves despite the fact that the homeowners could not afford to pay for the mortgages. The government further relied on their reports, which had accounting errors, and passed new regulations to allow them to buy $200 billion in subprime loans.
[...] In AIG, the corporate culture and the leadership style also influences accountability. In his expansion of the Company, Maurice used an autocratic style to ensure accountability in his decisions. In the period 2008-2009, bad leadership led to lack of accountability. Cassano and Sullivan continued to reassure investors, who demanded of the market indicator, of their new identified areas of exposure to residential housing. The regulations that the government enforces is associated with some other costs. Economist has classified the costs as either social or economic. [...]
[...] The cost is usually passed on to the consumer. References Greenberg, M. R., & Cunningham, L. A. (2013). The AIG story. Hoboken, N.J: John Wiley & Sons. Flamholtz, E., & Randle, Y. (2011). Corporate Culture: The Ultimate Strategic Asset. Palo Alto: Stanford University Press. [...]
[...] Corporate Culture - Mortgage Companies The case presents some of the error that the mortgage Companies did. Despite the New York Times warning in 1999, the Companies went ahead and guaranteed $12 trillion in the mortgage market. The situation severely affected them in the 2008 economic crisis. They committed themselves despite the fact that the homeowners could not afford to pay for the mortgages. The government further relied on their reports, which had accounting errors, and passed new regulations to allow them buy $200 billion subprime loans. [...]
[...] Competition is the key to newer product creation using high technology levels. The entire market adjustment leads to low prices for the commodities in the market. In my opinion, the benefits outweighs the cost since in the future, the well-being of the consumer is guaranteed as the products becomes cheaper and of high quality. Deregulation minimize the government involvement in the business thus allowing the market to work effectively. On the other hand, deregulation has led to stakeholder's increased costs. For example, Maryland deregulation led to increased utility cost in 1990s. [...]
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